Posts Tagged ‘stress’
The stress of a “death spiral”
There are many who like to quip that Nortel is in a “death spiral”. The theory is that customers may be hesistant to buy Nortel at a time when its solvency 2-3 years down the road is questionable. Understandably this makes them wary. After all, they want to be sure that product support, often as important as the product itself, will be available in the future. They want insurance behind their purchase. For this reason the competitors’ sales teams are likely exploiting this reason to gain market share, causing Nortel to lose more customers.
The loss of customers causes a further decline in revenue, thus hastening the slide towards bankruptcy. And so the cycle continues.
This is analysis has been so widely reported that it need no further discussion here. But one thing that’s worth pointing out is how this “death spiral” is affecting workers.
Just the other day we became aware of an employee who said that two people were laid off from their group. With the current hiring freeze (and freeze on most other spending) there are simply no resources available to replace them, onsite, offsite, onshore or offshore. The remaining members will just have to “pick up the slack.” Of course, this isn’t really possible, so their deadlines will slip, or product quality will suffer, further deteriorating the brand name and reputation of Nortel.
But what’s to be done? There is no easy answer, of course. It may be that the bad management decisions of yesteryear are coming back to haunt the executives one last time. And it may be that under the current conditions recovery is hard to unlikely. But one thing that is for certain is that this situation is placing much more undue stress on workers who have been living in fear for many years. Some will continue to handle it, though some will eventually crack and seek employment elsewhere. This will further contribute to the “death spiral.”
After the most recent quarterly earnings release, Nortel released a FAQ to its employees. One of the questions was, “What is the attrition rate of employees at Nortel?” In the answer, Nortel refused to disclose the exact numbers (as is expected since this would be valuable information to competitors/recruiters) but merely said that the Nortel employee base was “extremely loyal.”
While it is true that many be loyal, their patience is certainly being tested beyond what would be considered loyalty. (The entire topic of loyalty deserves its own article)
